(Analyst commentary added.)

DEERFIELD, Ill. (

TheStreet

) --

Walgreen

(WAG)

has lived up to the hype.

Though its fourth-quarter profit slipped 2% from a year ago, the company reported results that still topped Wall Street expectations, sending its shares soaring 10.3% to $37.71 in afternoon trading Tuesday.

In the just-ended quarter, Walgreen said it earned $436 million, or 44 cents a share, compared with $443 million, or 45 cents a share, a year ago. Analysts expected the company to earn 39 cents a share.

Not Too Late to Buy Walgreens

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Sales jumped 8% to $15.7 billion from $14.6 billion, while same-store sales increased 2.4%. The drugstore received a boost from higher prescription-drug sales, which rose 4.5% at stores opened at least a year. Front-end same-store sales, however, fell 1.4%.

To boost sales in non-pharmacy items, Walgreen is looking to introduce new products like beer and wine, milk, bread and other core grocery items, says Toon van Beeck, an analyst at IBISWorld.

Two major initiatives, launched within the past year, have helped to propel the company to the top. One, its "Customer-Centric Retailing" program, is designed to helped attract and retain customers, while the company's "Rewiring for Growth" cost-cutting plan is intended to save the company $1 billion by 2011.

"Compared to Rite Aid, Walgreen is much more professionally run," van Beeck says.

But van Beeck says Walgreen does need to start expanding its profit margin, which is currently at 3.2%. He expects the company will achieve this as they cut store growth and look to really get the most out of each of their existing stores.

Walgreen, among other drugstores like

Rite Aid

(RAD) - Get Report

and

CVS Caremark

(CVS) - Get Report

, have been looking to take advantage of the heightened flu season by offering seasonal flu shots earlier this year.

Walgreen also plans to help

curb the shortage of liquid Tamiflu

by compounding capsules.

Last week, TheStreet users

voted Walgreen the drugstore stock best poised to profit from flu season

.

Walgreen also said on Tuesday that it launched a program that will allow customers to get a 90-day supply of certain prescriptions directly at stores instead of through the mail.

The drugstore has been working to beef up its health care offerings. In August, Walgreen said it signed a deal with

Caterpillar

(CAT) - Get Report

, the world's largest maker of construction and mining equipment, to offer prescription drugs directly to employees starting in 2010.

Last week, rival

Rite Aid reported yet another loss in its second

quarter and lowered its full-year outlook.

-- Reported by Jeanine Poggi in New York

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